"An Englishman's home is his castle!"
PUBLISHED: 13:12 09 December 2010 | UPDATED: 18:16 20 February 2013
This old adage has held true since we battened down the hatches and sought to repel attempts to invade our green and pleasant land" says Jo Broad director of independent Salisbury letting agent Jolly Property Services.
An Englishmans home is his castle!
This old adage has held true since we battened down the hatches and sought to repel attempts to invade our green and pleasant land says Jo Broad director of independent Salisbury letting agent Jolly Property Services. Unlike our European cousins, the dream of home ownership is embedded deep in the national psyche but things could be about to change!
The credit boom of the mid 2000s saw the dream of owning a home being possible for just about everyone. With hindsight it could be said the lending spree was irresponsible lending at 100% or even 110%, no deposits in place, no proof of regular income none of this a barrier to being financed in the purchase of a home. The recession saw this trend reversed in the most savage way and for the first time in a long time, money could be lost playing the property game with house prices falling by as much as 20% in 2008. The spectre of negative equity was upon us remarks Jo, and it shook the property market to its foundations.
Things have improved slightly since the darkest days of the recession, but in comparison to those halcyon days it is still very restrictive,
So where does this leave the man in the street who has to live somewhere?
The bald truth Jo feels, is that at the moment it simply does not make financial sense to buy and people are much better off renting a home. First and foremost the initial outlay is much less than trying to raise the finance to buy. A tenant has to find a deposit, usually equivalent to one months rent, and a months rent in advance before moving into a home. Compare this with the 25% of a property value that would have to be raised to obtain a mortgage and already the financial advantage is obvious.
What of the long held view that money spent on rent is money down the drain and there is nothing to show at the end? Jo refutes this strongly and feels it is an oversimplification of the facts. If we compare money spent on rent, with money spent on an interest only mortgage which is usually the type of mortgage on a buy to let property then in a sense they both represent lost money. Added to which interest rates are low at the moment, but they will inevitably rise again and this too will have financial implications.
Another distinct advantage to renting is the flexibility it gives. We have moved a long way from the ideal of the nuclear family domiciled in one area for the duration. Todays working population is much more mobile and renting a home gives the flexibility to move as employment requires. In addition families grow larger, kids leave home, couples break up all of which can have an impact on what is needed from a home.
Last, but by no means least, a tenant is not responsible for the day to day maintenance of a property. Any homeowner is all too familiar with the seemingly endless catalogue of things to be done, from servicing of boilers to replacing fallen tiles and mopping up after the burst pipes thaw! All a tenant has to do is call their agent or landlord and the problem is taken care of.
Of course there are two sides to any coin and one could ask where this leaves the existing homeowner, one possibly caught in the trap of negative equity and unable to sell but needing to move. As Jo points out renting a property as a landlord can be advantageous as well. The key thing is to choose an agent that will work best for your particular needs and who will find, not just a tenant, but more importantly a suitable tenant and also offer advice on the best way to present your home in order to attract this highly desirable person!
All of the above factors such as the need for mobility etc, apply to landlords as much as tenants and renting out your home can in effect make it pay its way and become less of a millstone. It is fair to say the sales market is languishing in the doldrums with prices much lower than 5 years ago and still nothing selling. Rents on the other hand are beginning to creep upwards and this could just be the time to capitalize on what remains a buoyant and active market.